POPA ReconWith just 5 days until the Fed meets, markets are pricing in a 70% chance of a rate hike.
With just 5 days until the Fed meets, markets are pricing in a 70% chance of a rate hike. 3 things worth highlighting: - It’s rare for the Fed to swing from cuts back to hikes within the same business cycle, though it’s not unheard of. - Hiking into the midterms is politically fraught and could be read as nudging the balance of power. - My take (speculative): today’s CPI likely won’t be hot enough to price in a full hike, so the trade shifts to a hawkish hold. If Warsh hikes next Wednesday at the Fed meeting, the market will have to take him seriously, and so will I. At that point, the tra…
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